- 10 -
Given these facts, no business activity was conducted by anyone
at the Sherman Oaks Property in 1997.
Although there was little or no business activity during the
years at issue, petitioner had entered into a lease for the
property, paid rent, and had some type of informal understanding
or arrangement with his brother relating to the Skin Service
Club. These facts, at least in form, suggest the expectation of
possible business activity. However, according to the record and
in substance, petitioner’s rent payments merely benefited
petitioner’s brother and mother. Petitioner’s brother was
provided with a place to operate various of his business
ventures, and petitioner’s mother received monthly income
payments. In addition, petitioner has not shown any relationship
between the rent payments and any income-producing activity of
petitioner, including his medical practice. Although
petitioner’s rent payments reflect his generosity to his family,
they fall short of the section 162 standard for deductibility.
Accordingly, we hold that petitioner did not conduct any
business activity at the Sherman Oaks Property during 1994 or
1997. We further hold that petitioner’s relationship to his
brother and/or the Skin Service Club does not provide a basis for
petitioner to claim a deduction for rental expenses on his
personal Schedule C. Any business activity that did occur at the
Sherman Oaks Property during the years at issue could only have
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011